Plant Your Stake and Rally Around It

Good or great?  Better or best?

A dilemma anyone running a business or managing an area or a function has is where to insist on “the best” and where “good enough” is good enough.

Customer service?  Getting to know each customer personally so they feel like “family?”  Product quality?  Product diversity?  Business efficiency?  Employee satisfaction?  Pay?  Benefits?

Can we agree that being all things to all people is a losing strategy for a business?

This may be an uncomfortable statement, but it is undeniable:  You can only be excellent, great and the best on one or at most two dimensions.  To expect to excel on all or most dimensions of running a business is not realistic.

If you build or manufacture the best product you probably don’t build or manufacture it as fast as some other companies.  If you pay the most you probably aren’t the most profitable.  If you provide the best service your operation may not be as “lean” as others.  If you offer the greatest variety of products, you may not have as much expertise in a given product as someone who specializes in that product.

The answer?  You must choose.  In the words of Michael Treacy and Fred Wiersema, who studied 80 leading companies and then wrote The Discipline of Market Leaders to explain what they discovered, market leaders “provide the best offering in the marketplace by excelling in a specific dimension of value.”

Clearly, Wal-Mart’s value proposition, lowest prices, is radically different from Sharper Image’s, unmatched product, or Bloomingdales, best service with great quality.

They go on to define the choice as falling into one of three categories:

• Best total cost. 

• Best product.

• Best total solution.

Choosing does not mean that the other “dimensions of value” are ignored.  You must “maintain threshold standards on other dimensions of value.”  If you are competing on cost, your quality still must be acceptable. If you are competing on product excellence, your pricing still needs to be in the ballpark.  If you are competing on customer service, your products still need to do the job and be reasonably priced.

 Nonetheless, you need to focus your energy where you insist on the best and the greatest, on the dimension on which you have chosen to compete:

• If it is price, you need to be relentless in reducing prices and controlling costs.

• If it is product quality, you need to be relentless about offering cutting edge products and knowing more about them and how they are used and perform than the competition.

• If it is service, you need to be relentless about knowing and serving the needs of your customers and making them feel part of your “family” than the competition.

This says that companies in any industry will not necessarily look or operate in the same way.  They will cluster around the three value propositions, lowest price, best product and best service.

Think about the other companies in your marketplace.  A good guess would be that they can be categorized based on the value propositions stated above. If you sort them out in this way, then you will know who your real competition is: the companies who are specializing in the value proposition you have chosen.  As long as you are “acceptable” on the other dimensions, you can “ignore” the companies not competing on the value dimension you have chosen, be it price, product or quality.

So its time to recognize the specialty you have chosen.  Be it cost, quality or service, plant your stake and rally around it!